USD/JPY trades in murky waters

Technical Analysis

EUR/USD remains in vicinity of 1.11

“The euro will continue to decline because the ECB has more ammunition" to carry out stimulus.”

- Toronto-Dominion Bank (based on Bloomberg)

• Pair’s Outlook

  Downside risks for the Euro are on the table, considering that EUR/USD has tumbled for a fifth day in a row on Thursday. The bears are still unable to penetrate the 1.11 support area, with gains contained mainly by the weekly S1 and 20-day SMA. From here we foresee a rebound on Friday, even though the first formidable resistance at 1.1238/46 (weekly PP; monthly R3) seems to be out of reach over the next 24 hours. Alongside, a drop below 1.1098 will put at risk the 200-day SMA (1.1049) and success here will expose the three-month uptrend at 1.0923.

• Traders’ Sentiment

  For a third consecutive day the advantage of the short market participants over long traders is unchanged at ten percentage points, while orders are also slightly bearish (52-53%) on the Euro.

GBP/USD under the risk of falling below 1.43

“If an agreement is not approved by all 28 EU Member States at this summit, sterling would correct sharply against both the dollar and the euro.”

- Intesa Bank (based on Pound Sterling Live)

• Pair’s Outlook

  Although the Cable edged closer to the resistance cluster around 1.44, it stabilised at lower at 1.4340. Nonetheless, the bullish momentum prevailed yesterday and could even push the GBP/USD above 1.44 today. Technical indicators also suggest the pair extend its gains, however, a strong impetus is required for the rally to overcome the immediate resistance. Chances of the Pound suffering a loss are higher, which the nearest support, namely the weekly S2 at 1.4255, will doubtfully be able to stop.

• Traders’ Sentiment

  Bulls remain strong, as 61% of traders hold long positions today, compared to 58% on Thursday. At the same time, the portion of orders to acquire the Sterling added 7% points, rising up to 63%.

USD/JPY trades in murky waters

“Although the market mood hasn’t turned fully into a risk-off [mode], we’ve been seeing the yen’s strength across the board.”

- Mizuho Bank (based on Market Watch)

• Pair’s Outlook

  Same as yesterday, the appeal for safe havens, such as the Japanese Yen, is relatively high. On Thursday the USD/JPY currency pair broke through a rather strong support area, leaving the door open for a decline towards the 112.00 mark. This major level is somewhat bolstered by the monthly S3, which is located at 111.78 and should contribute to limiting the possible intraday losses. Even though daily technical indicators support this outcome, the weekly ones are no long giving bearish signals, implying that a corrective rally towards 113.88 supply area could occur.

• Traders’ Sentiment

  The US Dollar appears to be overbought, as 71% of all open positions are long. The share of sell orders surged from 32 to 69%.

Gold erases three-day losses

“We think the current gold price rally will reverse, once risk-sentiment buying fades, similar to the trend seen in early 2014 and 2015.”

- Nomura (based on CNBC)

• Pair’s Outlook

  The bullion saw a renewal of the confident uptrend on Thursday. Following success at the monthly R3 at 1,209 gold decided to move higher and eroded the weekly pivot point at 1,221. The only resistance to contain the rally was the May high at 1,232. The RSI indicator is on the verge of signalling that gold is becoming overbought again. We may observe a correction lower throughout Friday, with the key bearish target placed at 1,191 (Oct 2015 high). In the meantime, any surge above May high will immediately expose the recent multi-period high of 1,263.50.

• Traders’ Sentiment

  Even though two days ago the share of bullish positions in the SWFX market rose to 33% from 27%, yesterday it bounced back to 32%.

•  Download Full Daily Forex Technical Overview

  Don't miss our new daily forecasts for EUR USD, GBP USD, USD CAD and USD JPY!